Solid Performance at Subsidiaries to Attract Stronger Notice
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.
Value of SKT’s non-telecom domains to garner greater attention following planned spin-off
SKT’s subsidiaries, including not only SK Hynix but also ADT Caps, 11st, Onestore, WAVVE, and T-Map Mobility, have been enjoying healthy earnings growth. Given such, following the planned spin-off, SKT’s non-telecom businesses should garner greater market attention, and their values are to be properly appreciated. The spin-off of SKT into a telecom company (remaining entity) and an ICT investment-focused holding company (new entity) is projected to take place in 2H21. In the aftermath, we anticipate not only resultant EV expansion, but also a stronger probability of securing funds via IPOs and additional M&A activities.
Onestore: Has secured stake investment from all three domestic telcos
We note that all of the three domestic telcos have made stake investments in Onestore. While Google Play Store currently possesses a dominant M/S, we expect Onestore to gain greater ground moving ahead, helped by its partnership with the three telcos. Of note, domestic game companies have been beefing up game releases on Onestore, as it charges lower commission rates versus Google Play Store. Moving ahead, Onestore’s market position should strengthen if: 1) smartphone models launched by each telco come pre-loaded with Onestore; and 2) telcos offer discounts for app purchases in connection with their membership programs. Of note, having: 1) acquired the publishing company ROK Media; and 2) established Studio YesOne alongside Yes24, Onestore is aiming to evolve into a comprehensive content platform player that encompasses webtoons, web novels, and movies. For reference, SKT now possesses a 48.4% stake in Onestore, with KT and LG U+ each owning a 3.2% stake, and LG U+ having a 0.7% stake.
ADT Caps: Set to become leading provider of integrated security solutions
Having merged with Infosec, ADT Caps is to emerge as a major security player encompassing both physical security and information security solutions. Helped by the growth in big data and cloud markets, the information security market is showing rapid growth. Given such, we expect the convergence between information security and physical security solutions to accelerate moving ahead. We expect ADP Caps to outperform rivals in terms of offering integrated security solutions, as it could benefit from synergies with SK Group affiliates (via, for example, the offering of security services related to T-Map parking). The firm’s home security business should also enjoy full-fledged growth in terms of both subscriber number and sales, as related solutions come bundled with SKT and SK Broadband’s telecom services. On a post-merger basis, ADT Caps’ sales totaled W1.33tn in 2020, and are projected to jump to W1.61tn (+21.1% y-y) in 2021 and to W1.92tn (+19.6% y-y) in 2022.
T-Map Mobility: To offer various location-based services
Having secured investment from Uber, T-Map Mobility has re-launched a cab-hailing service under the name of UT (formerly T-Map Taxi) based on its partnership with Uber. Going forward, the service is likely to expand its M/S, based on partnerships with SKT (centering upon membership programs) and Uber. Also worth noting, taking advantage of T-Map’s location-based data, T-Map Mobility is to engage in the data market in earnest. Noting T-Map’s high brand awareness and popularity, we expect the new company to be able to easily expand into new data-based domains, including ads, auto insurance sales, and auto-infotainment systems.